KANT’S CATEGORICAL IMPERATIVE

• UNIVERSAL PRINCIPLE– A person should act

that the principle of one’s act could become a universal law of human action in a world in which one would hope to live.

– A person should treat other people as having intrinsic value, and not merely as a means to achieve one’s end.

CONTRACTARIAN DEONTOLOGY

• John Locke – Each individual has

inalienable natural rights. The purpose of society is to protect these rights

• Rawls (Veil of Ignorance)– Social Justice is

created when rational people would formulate rights if they did not know whether or not these principles would apply to them.

CRITICAL QUESTIONS?• DO ALL HUMANS

HAVE POTENTIAL FOR GREATNESS?

• WHAT ARE SOME OF THESE POTENTIALITIES?

• ARE PEOPLE SOCIAL BY NATURE?

HUMAN NATURE ETHICS• ARISTOTLE

– All humans share innate capacities and desires. All Humans are social creatures and therefore have the capacity to become excellent members of society. This is done by studying, becoming wise and participating in politics.

– Negative behavior is a result of not being allowed to reach full potential

BUSINESS ETHICS AND ECONOMIC SENSE

• Adam Smith– The Wealth of Nations

• It is not from the benevolence of the butcher, the brewer,or the baker that we expect out dinner, but from their own interest. We address not heir humanity but their self-love

ADAM SMITH IN

The Theory of Moral Sentiments

• There is a need to go beyond profit maximization to: humanity, justice, generosity, and public spirit.

ECONOMIC INSTITUTION’SFOUNDATIONS

• Common Behavior Patterns

• Shared Trusts• Mutual

Confidence

OTHER FORMS OF CAPITALISM

• Japanese Ethos– Honor– Duty

• Confucian– Hard Work– Thrift– Family

Public Good

• All Benefit• Non-Competitive• One’s Consumption

does not exclude another

• EXTERNALITIES• Public Ownership• Public Regulation• Public Concern in

Private Decisions

CRITICAL QUESTIONS?• WHAT IS TRUTH?• WHAT IS A LIE?

TRUTHFULNESSEmmanuel Kant 1771

• TRUTH TELLING LEADS TO

• DISCOURSE WHICH LEADS TO

• FELLOWSHIP WHICH LEADS TO

• FORMATION OF A SOCIETY

GENERALLY TO LIE IS EVIL AND TO BE A LIAR IS TO BE A COWARD

• SILENCE– Not an option because it

is view as unsocial• SECRETS

– Telling secrets is like giving presents and a nature inclination. Strength is in keeping them.

• TRUTH– Important because one of

two way to gain knowledge. The other is experience.

• LIE– When giving impression that you are telling the truth

• FALSE STATEMENTS OK WHEN– Other person does not have the right to demand the

truth– Other person may make wrong use of the truth– Other person may harm you

• FLATTERY– Can be act of kindness (weakness) or treachery

• FAULT FINDING– OK for someone in authority when used with love,

goodwill, or sweetness• SPYING

– We have no right to spy on others• ANY ACT THAT WORKS AGAINST FRANKNESS

LOWERS THE DIGNITY OF HUMAN KIND

CRITICAL QUESTIONS?• IS IT APPROPRIATE FOR BUSINESS TO

HAVE ITS OWN ETHICAL RULES?

Is Business Bluffing Ethical?Albert Carr (1968)

• BUSINESS IS A GAME WITH ITS OWN ETHICS

• FALSEHOOD IS NOT FALSHOOD WHEN TRUTH IS NOT EXPECTED BY THE OTHER SIDE

• THE GAME PRESSURES PEOPLE TO DECEIVE. DECEPTION MUST BE WITHIN LIMITS OF THE RULES OF THE GAME (LAW)

• ETHICS ARE OF VALUE WHEN THEY ADD VALUE TO THE BUSINESS

• TO WIN ONE MUST PLAY TO WIN• THERE ARE BOUNDARIES TO

BEHAVIORS AND DEFINITIONS OF HONESTY, INTEGRITY AND DECENCY WITH THE GAME.

CRITICAL QUESTIONS?• WHAT ARE THE BASIC “SETTLED”

ETHICS IN BUSINESS DEALINGS?• WHAT ROLE SHOULD

GOVERNMENT (POLITICS PLAY)?

LIMITS OF BUSINESS ETHICSJoseph Betz (1999)

• INFORMAL– You may do unto

others what experience teaches us they might do to us.

• FORMAL– Law

BUSINESS AND LAW

• SINCE THE ETHICAL BAR IS SO LOW, SOCIETY MUST CONSTANTLY WRITE LAWS REGULATING BUSINESS.

CRITICAL QUESTIONS?• How much should you trust another in

business negotiation?• Is the market place established as a place to

deceive others?

Promoting Honesty in NegotiationsCramton & Dees

• Foundation Theory– Most people place a high value on

their own welfare– There is weakness in all of us– Others will behave ethically only if

they expect others to do the same

NEGOTIATION

• FALSE IMPRESSIONS• PRIVILEDGED

ACCESS TO INFORMATION

• USE OF THREATS AND PROMISES

• UNDISCLOSED SETTLEMENT PREFERENCES

Factors Affecting Honesty

• Asymmetry of Information

• Verification is Difficult

• Intention to Deceive is difficult to establish

• Insufficient resources• Interaction is

infrequent

• Ex Post redress is costly

• Reputation information not available

• Unique circumstances

• To much to lose to be honest

LIMITING DECEPTION

• VERIFY CLAIMS• DEVELOP

CONTRACTS (Warranties/ Bonds/ \Escrow)

• PRESERVATION OF REPUTATION

• LIMIT MORAL HAZARDS (Shirking Responsibilities)

REAL WORLD LIMITS

• Legal and Regulatory Protection

• Institutional Verification Available

• Standard Contracts• Third Party

Negotiators• Credentials

Individuals Available

PREPARING FOR NEGOTIATIONS

• Determine incentives for deception

• Determine character of other side

• Determine your attitudes toward issues and others

BUILDING TRUST

• Face to Face Contact• Create opportunities

to display trust• Demonstrate your

trustworthiness• Place negotiations in

long term context• Bring in trusted

intermediaries• Self Protection